The relevant Ministers under the Overseas Investment Act 2005 (the Act) recently declined consent to the NZ$88 million deal by Chinese owned Pure 100 Farm Ltd, to purchase Lochinver Station, near Taupo. The decision was reached on the grounds that the purchase of Lochinver Station would not meet a “substantial and identifiable” benefit to New Zealand. To obtain consent for overseas investment in “sensitive land”, applicants must meet the relevant criteria set out in section 16 of the Act. This includes demonstrating that the investment will, or is likely to, benefit New Zealand. If the land includes non-urban land, and exceeds five hectares in area (as was the case in this situation), then the relevant Ministers must determine whether the benefit will, or is likely to be, “substantial and identifiable”. This requires weighing up a number of economic and non-economic factors, such as new job opportunities, increase in productivity, increase in export recipients, and conservation related benefits.
The key point to take away from this decision is how Ministers will exercise the “substantial and identifiable” test in the future. Some notable factors that weighed in the minds of the Ministers in this case were:
- the small size of the land to be developed (379ha), compared with the total size of the land (13,843ha); and
- the economic benefits to the New Zealand economy via increased export recipients, which was said to be unsubstantial due to the small size of the land and the large size of the dairy and meat sectors as a whole.